Origin of Capitalism

In the following blog, Robert Paul Wolff answers how capitalism started. Taken from: The Philosopher’s Stone

Wednesday, March 5, 2014
Christopher Walsh posts the following interesting question in the comments section of this blog:

dear professor wolff

the fact of primitive accumulation seems a particularly telling criticism of Nozick style justifications of capitalism because it hoists them on their own petard – what is primitive accumulation but a particularly egregious form of coercive property rights violation i.e. theft. I sometimes wonder whether capitalism could be justified if there had been no primitive accumulation and everyone started out with equal shares of resources. Perhaps the appropriate response is that capitalism could never have come into being in such circumstances. What do you think?

I have had my say about Nozick’s book in the article [ Robert Nozick’s Derivation of the Minimal State,”Arizona Law Journal, 1977 ]archived at box.net [follow the link at the top of this page], so I shan’t repeat myself here. But the larger question about the conditions under which capitalism came into existence, or could come into existence, is worth some discussion, because it is an opportunity to expose a fundamental defect in the style of thinking characteristic of those of all political complexions who defend capitalism.

It is of course obvious that in some sense everyone did start with equal shares of resources, if we go back far enough to a time when there were no property rights at all, no law, no organized society, indeed perhaps no homo sapiens sapiens, but just bands of homo neanderthalensis. But let us for a moment engage in the kind of “thought experiment” that anarcho-capitalists, libertarians, and other such-like lovers of capitalism so favor, and which is Bob Nozick’s stock in trade. Imagine a society of men and women in which everyone farms a plot of land or plies a trade, and in which, on market day, they all gather in the town square to exchange what they have produced for what they need: potatoes for shoes, cloth for chickens, hats for strawberries, and so forth. How might capitalism as we know it emerge out of this idyllic starting point? Well, one imaginative chap who had read a little Friedrich Hayek or Milton Friedman on a rainy day, might step forth in the town square and in a loud voice announce that he is prepared to hire some sturdy lads and lasses to work a good plot of land he has located. The land should yield a thousand bushels of wheat a year, he says, and he is prepared to give the ten farmers he seeks to hire fifty bushels of wheat a piece for their labor [numbers for illustration only — I am a philosopher, so I haven’t a clue how much wheat one farmer can grow in a year]. Everyone looks at him as though he had lost his senses. “Why on earth should we give you half of the crop we raise with the sweat of our brows and the pain of our backs?” they want to know. “Well” he says, I had the idea first, and besides I found the land, so I have decided to take half the crop for myself.” The poor sap gets no takers, and goes back to the library [they do have libraries] to see whether he can find another book that will give him the clue to becoming a capitalist.

First he tries some old Puritans, who preach the virtues of discipline, self-sacrifice, and the deferral of gratification. Apparently the secret to becoming a capitalist is to live a life of self-denial and carefully put to one side a part of every year’s crop, or a portion of every year’s pile of shoes — whatever happens to be one’s way of making a living. So he tries this, and sure enough it seems to work. After a year of hard farming labor, he sets aside ten of the one hundred bushels of wheat he has grown, which he exchanges for some additional tools and better seed. Year after year, he keeps at it, and he does indeed prosper, so much so that he is visibly better off than those of his fellows who are less able or willing to engage in disciplined self-denial. But he still does not have anyone working for him, because whenever he tries to hire some chaps to farm his land, he finds that he must either offer them the full product of their labor, which doesn’t do him any good whatsoever, or he must offer them less than the product of their labor, in which case they laugh at him and go back to their own land.

Well, twenty years go by, and our aspiring capitalist is getting on in life, so he decides to go back to the library for one last search of the available books. There he stumbles on a copy of Capital, and after he has plowed through the mysterious and quite unhelpful discussions of the fetishism of commodities and the working day [what, he wonders, are factories], he comes upon Part VIII “The So-Called Primitive Accumulation.” The heavens open, the angels sing, and he realizes that he has found the Promised Land. Off he goes back to his village, where he proceeds to use the little bit extra he has saved by his rigorous self-denial to hire a few bully boys who prefer beating up farmers to working the land. They pretty quickly drive the hard-working farmers from the good land, and stand ready to guard it for its new owner, our capitalist hero. Now, when he goes to the square and offers to pay fifty bushels of wheat for enough work to produce one hundred bushels of wheat, the dispossessed farmers, driven from their land, have no choice but to accept his offer. Agricultural capitalism has arrived. Can financial capitalism be far behind?

Modern-day apologists for capitalism simply assume without explanation that a few people will own the means of production — the state standing behind them to protect that ownership with the full force of law and police — while the many have nothing but their labor and are therefore forced to sell that labor to the owners of the means of production for a wage. These apologists focus all their attention on the wage bargain struck in the labor market, worrying endlessly about whether it is a bargain “freely arrived at,” without ever really asking themselves how the participants in the wage bargain came to be in the situation that defines their relative bargaining power.

To answer Christopher Walsh’s question simply, capitalism never develops out of a situation in which everyone has an equal share of the resources, unless first a process of expropriation and primitive accumulation has taken place.

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